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How Government Unions And Their Allies On
Wall Street Are Destroying California
By
Editor, on December 19th, 2011
With government
employees, a union agenda is inherently in conflict with the public interest,
because unless taxes are raised, there is always a choice between higher wages
for government workers, or investing in improving government services. With
unions in the government, the overall union agenda – more wages and benefits,
more union members – is not necessarily in the public interest.
Also,
unionized government workers are organized politically, and especially at the
state and local level they exercise huge, if not absolute control over who can
fund their campaign and get elected. Government unions negotiate with the
people they elected. And it’s hard to imagine anything more pernicious than the
way public sector unions have gotten in bed with Wall Street to hold taxpayers
hostage to backstop a 7.75% annual return to fund government worker pensions
that are five-to-ten times better than social security. In general, whenever
government spending creates deficits, Wall Street bankers get to extend loans
to government entities, and by extension, to taxpayers.
The more
organized labor operates in a monopolistic environment, the more potential
exists for corruption, collusion with management, and broader damage to
economic health. In competitive industries, the role of organized labor is not
as problematic. If a union asks for too much, they kill the company – this
creates some restraint on those unions. Government agencies are monopolies
however, and simply raise taxes to fulfill their demands.
Here are
some facts (with links to analysis and source data) to help illustrate how
public sector unions have hijacked California’s
government and are destroying California’s
economy:
(1) Public
sector employees, on average, make 50% more in base pay and 100% more in total
compensation than private sector employees. In California, using core data and using very
conservative assumptions, the average base pay of a government worker is
$65,000 per year; adding benefits, the average total compensation of a
government worker is $102,000 per year. By comparison, the average base pay of
a private worker in California
is $46,000 per year; adding benefits, the average total compensation of a
private sector worker is $57,000 per year. The real average for private sector
workers is undoubtedly much lower than this, since the estimates here did not
factor in California’s nearly 2.0 million private sector workers who are
independent contractors:
Calculating Public Employee Total Compensation
(2) About
80% of all state and local government expenditures in California
are for personnel costs:
What Percent of California’s State
and Local Budgets are Employee Compensation?
(3) Public
employee union spokespersons grossly understate the average pension awards:
CSEA Spokesperson Understates
Average State Pension
How Much Do Government Pensions Really Cost?
(4) Public
employee unions spend at least $250 million per year, just in California, to influence the elections and
policy priorities of our state and local politicians:
Public Sector Unions And Political Spending
(5) Overall,
corporations do outspend unions, but by a ratio of about 2-to-1, not the
preposterous 15-to-1 claimed by union spokespersons. But corporate political
spending is split roughly equally between Republicans and Democrats, while 95%
of union political spending goes to Democrats:
Is Union Reform Partisan?
It is false
to suggest that public sector union spending is necessary to counteract
corporate spending. Corporations almost never challenge the public sector union
agenda, which is more pay and benefits for unionized government workers, and
more government workers. They really only start to fight when taxes are raised,
but that is a different fight. Corporations are terrified of the public sector
unions, who not only will always outspend them on the issues that matter to
them (more pay and benefits for public employees), but can target them in other
ways.
(6) Public
sector unions now exercise nearly absolute power over the political process in
California and are attempting to suppress the state initiative process as well
as local efforts at fiscal reform:
California’s Government Unions Fight Reformers
Unions Continue Efforts to
Suppress California Initiatives
California’s Legislature Continues
to Propose Laws to Preserve Union Power
California Legislature Targets Initiatives
Lobbyists
hired by public sector unions, alongside lobbyists hired by Wall Street, are
trying to make our politicians enshrine the pension liabilities – sold by Wall
Street lobbyists to union-backed politicians – permanently into our tax code.
And together, Wall Street and public sector unions have made public sector
agencies collection agents for Wall Street. Wall Street hedge funds now bypass
brokerages to manipulate market liquidity and asset values, and public sector
pension funds are the biggest players on Wall Street. Not only do they control
about $4.0 trillion in assets, but they have the full backing of the public
sector unions, the politicians they control throughout America’s
states, cities and counties, and the taxpayers as the final guarantors.
(7) Public
sector unions are in a partnership with some of the worst elements of Wall
Street – through their pension funds they extract 7.75% annual interest out of
an economy and investment market that has been stagnant for nearly a decade –
forcing taxpayers to cover the difference:
Government Pension Funds ARE Wall Street
Public Sector Pensions Investing in Hedge Funds
Union Influence on Pension Funds
(8) Public
employee union members, including officers and former officers, occupy board
memberships on the major public employee pension funds as well as a super
majority on the board of the influential National Conference on Public Employee
Retirement Systems (NCPERS):
Union Influence on Pension Funds
The
symbiotic relationship between public sector unions and Wall Street cannot be
overemphasized. Both entities profit when government entities go into debt –
the unions get to expand headcount and compensation for government workers
beyond what normal tax revenues would sustain, and to cover government budget
deficits, Wall Street banks get to engage in money-lending at a titanic,
literally trillion dollar scale. Because government workers are unionized, and
because these unions have an agenda that has more in common with Wall Street
bankers than with taxpaying ordinary workers, there was little to stop the
government unions from pressuring politicians to calibrate government
compensation packages based on inflated asset values and inflated, overheated
salaries that came and went during the economically unsustainable internet
bubble of the 1990′s, followed by the early 21st century real estate
bubble.
http://unionwatch.org/how-government-unions-are-destroying-california/